DERC nails discom lie on fund crunch

Delhi's three power companies, which have complained of fund crunch to delay a new tariff order that is expected to make electricity cheaper, have been lying about their financial health, the city's power regulator says.
The companies earned a combined cash profit of Rs 941.35 crore last f

Delhi's three power companies, which have complained of fund crunch to delay a new tariff order that is expected to make electricity cheaper, have been lying about their financial health, the city's power regulator says.

The companies earned a combined cash profit of Rs 941.35 crore last fiscal and have reasonably healthy credit ratings, the Delhi Electricity Regulatory Commission (DERC) has pointed out. The regulator has also rubbished discoms' claims that getting loans to buy power has become difficult.

DERC's director (tariff), A.K. Singh, wrote to chief executive officers of the three companies last Friday, asking them to clarify their stand on these findings within a week.

The companies had claimed they had a combined revenue shortfall of nearly Rs 1,000 crore last fiscal and warned they might not be able to buy sufficient power because of accrued profits that were yet to be realised in cash.

The Delhi government had forced the DERC to suspend declaring this year's revised electricity tariff a day before it was to be announced this month, asking it to first consider the companies' worries.

But in its letter to the companies last week, the regulator said their claims of a cash crunch are contrary to their audited accounts, indicating they had made incorrect representations to the state government.

Worries about reduced borrowing credibility were unfound since none of the companies could produce even one letter from any lender who has refused loan on the grounds of inadequate net worth, Singh pointed out.

For instance, credit rating agency ICRA has offered the North Delhi Power Limited (NDPL) its top rating of LAA and A+ for bank lines and CP programme, indicating lenders run the lowest short term credit risk.

"ICRA has also drawn comfort from the strong liquidity position of the NDPL, as measured by unutilised bank limits," ICRA's credit rating certificate states.

The NDPL earned its highest cash profit of Rs 468.82 crore last fiscal as compared to Rs 169.60 crore in 2004-05, while its tangible net worth increased by more than double from Rs 456.94 crore to Rs 1561.11 crore over the same period, the regulator wrote in the letter. The company's net cash accruals also increased from Rs 48.92 crore to Rs 82.71 crore between 2008-09 and 2009-10, besides an excellent debt-equity ratio, which indicates its debts have reduced, the regulator said.

In case of the BSES Rajdhani Power Limited (BRPL), credit rating agency CARE has rated it as BBB+ for long-term borrowing and PR3 for short-term borrowing, ratings the power regulator termed in its letter as fairly reasonable.

The BRPL also earned its highest cash profit of Rs 319.16 crore last fiscal, which contrasts sharply with a loss of Rs 294.77 crore it reported in 2007-08, the DERC said.

Its tangible net worth nearly doubled from Rs 297.82 crore in 2008-09 crore to Rs 575.88 crore last fiscal, the regulator wrote in the letter.

Its cash accruals stood at Rs 102.52 crore last fiscal as against Rs 30.99 crore in 2004-05.

According to the DERC, the BSES Yamuna Power Limited (BYPL) also earned its highest cash profit of Rs 157.33 crore last fiscal, which contrasts sharply with just Rs 16.89 crore that it earned in 2007-08.